At the very core of any successful long term investment strategy lies asset allocation. There are periods when equity markets, and even more occasionally bond markets, seem to move in tandem. But these tend to be the exception.
Most of the time, markets move in different directions, which for the investor brings risk and opportunity in equal measure. Our experience here at Linchpin can help you navigate your way through and provide a truly independent challenge to your own investment hypotheses. The aim: to create a portfolio that can stand the test of time.
LET’S TALK LONGER TERM
With a clear, carefully considered long term strategy in place – and stemming from that, a target asset allocation - you can keep on course when the noise from the markets themselves and the “commentariat” make it hard to see the wood for the trees.
And if you start to stray significantly off target, you need to understand why that is and ask yourself whether you are comfortable there. From our experience, the answer will sometimes be yes and sometimes no, but it’s asking the question in the right way that’s key. We can help you design a long term strategy which performs across the whole market cycle – adjusting it according to longer-term changes in economic variables such as inflation or growth.
Tactical asset allocation, meanwhile, is a very different animal.
LET’S TALK TACTICAL
Without question, over the shorter term, differing asset classes can perform very differently. Take for example Emerging Markets. These have greatly underperformed Developed Markets during the period 2010-2015, whereas they have, over most time periods, provided superior returns by comparison.
But whilst tactical asset allocation can seem an obvious way to add value, it can be a lot harder to achieve in practice; dedicated tactical asset allocation funds have had a poor record of adding value.
One reason is that it requires immense discipline to avoid getting sucked into the market’s often volatile emotions. Which is why, for many years, Linchpin has been successfully using the database of partners CrossBorder Capital Ltd.
This data provides a clear framework via a number of metrics to show where a particular asset class is in the market cycle. Armed with that knowledge, and the historical perspective to understand whether the price of that asset is more likely to go up or down, tactical asset allocation becomes much easier to do successfully.
So Linchpin can help you make better tactical asset allocation decisions or provide a data-based check on your own investment hypotheses. We may make you think again or we may add conviction to your theory. Either way we will be adding value. Alternatively, you can have access to CrossBorder’s unique expertise by purchasing the reports here.
SO LET’S TALK: Call William Bourne on 0203 637 6341 or email him at firstname.lastname@example.org or use the online contact form.